Three years ago, the General Services Administration (GSA) unveiled its massive $68.2 billion Networx contract, promoting it as a more robust, technology-rich and cost-effective successor to FTS2001. While the value of Networx and the federal government’s commitment to it remain unchanged today, federal agencies are still struggling to make the move to the new contracting vehicle.

“I think the Networx contract offers cost savings on many of the services that are provided versus the FTS2001 pricing,” Kevin Plexico, senior vice president for research and analysis at INPUT told 1105 Government Information Group Custom Media. “Probably the key selling feature of the contract was less expense for basically the same services. It also offers some new services that weren’t provided under the FTS contract that were designed to move agencies to a more modern telecom infrastructure.”

So what exactly is Networx and why is it so important to the federal government? In short, it’s the largest federal telecommunications acquisition ever competed and its mission is to meet the federal government’s full range of worldwide telecommunications and networking requirements over the next decade. GSA says that Networx’s application-oriented architecture will support the federal communications infrastructure underlying key government operations, providing a “seamless, secure and interoperable federal telecommunications environment”.

The Networx contract is divided into two parts, Networx Universal and Networx Enterprise, to give agencies a more comprehensive selection of telecommunications and IT services to meet their own unique mission-critical needs. “One was to allow the market players to process vehicles that provide a much more comprehensive approach to networks modernization,” Rishi Sood, vice president of Gartner, said in an interview with 1105 Government Information Group Custom Media. “The other was to allow smaller players into the marketplace.”

Networx Universal, which was awarded to AT&T Government Solutions, Verizon Business, and Qwest Government Services Inc., provides all the national and international telecommunications services available under the FTS2001 contract. It also provides IP-based, wireless, satellite, security services and a set of optional features such as Ethernet, IP video transport, collaboration support, land mobile radio, mobile satellite, and cellular digital packet data.

Awarded in March 2007, the Universal contract is worth a maximum of $48.1 billion. Each contract has a four-year base with three two-year options and each of the three provider companies has been guaranteed minimum revenue of $525 million.

Networx Enterprise, awarded in May 2007 to the three Universal contract holdes plus Level 3 Communications and Sprint, is valued at $20.1 billion and was intended to focus more on national IP-centric services. The Enterprise contract requires companies to offer a minimum of nine IP-related services, such as voice over IP (VOIP) and network-based virtual private networks (VPNs).

“The default strategic approach was to allow agencies to either move wholesale into a network modernization action or pick the one, two or three major areas they wanted to specialize in,” Sood said. “Clearly there’s a number of auxiliary concerns that come through the process, which made Enterprise a compelling alternative.”

While in theory, the two contracts were designed to address different needs, in practice agencies appear to be using the vehicles interchangeably. “The Universal and Enterprise are really more alike than they are different,” Plexico said. “I’ll be quite honest with you, it’s really very hard to tell the difference. They cover, for the most part, the same set of services and there’s a tremendous amount of overlap among the two services.”

OMB Steps InNetworx may seem on the surface to be just another comprehensive government telecommunications contract, but a closer look reveals some unique attributes. For one thing, this is the first time the Office of Management and Budget (OMB) has required agencies to adopt a specific telecom contract.

One reason for OMB’s mandate is Networx’s ability to help agencies update their telecommunications and IT systems, particularly with regard to implementing the Trusted Internet Connections (TIC) initiative. TIC requires agencies to optimize individual external connections, including Internet points of presence currently in use by the federal government. Reducing the number of external connections will improve the federal government’s incident response capability.

It also will save money. In the wake of a cost-benefit analysis (CBA) of the Networx contract by the Federal CIO Council, OMB in August 2008 issued a memo to government agencies mandating the use of the contract. “Based on the findings of the analysis, agencies shall use the General Service Administration (GSA) Networx contract to satisfy requirements currently being met via the FTS2001 contract,” OMB’s memo said.

“The data says they’ll save money if they move,” Plexico noted. “While the savings to any particular agency might not be that much to that particular agency, when you look across all the government agencies, there’s a lot of money that could be saved on a monthly basis. Given the budget environment that we’re in, the government doesn’t want to be perceived as wasting money that it could be otherwise saving because it’s perceived as lazy.”

In preparing the CBA, the Federal CIO Council took into account both federal and Department of Defense (DoD) service needs, while examining any lessons learned from agencies’ recent IT service requirements. The team also spent considerable time evaluating the Networx Universal and Enterprise contracts to understand both the scope and the technical characteristics of potential service offerings on each.

The CBA examined the Networx contract to determine whether its use would satisfy FTS2001 requirements as well as non-FTS2001 requirements, such as the National Security System (NSS). In both cases, the analysis focused on comparing solutions that could be satisfied either by a single Networx-priced service or combination of multiple Networx-priced services. The CBA also considered requirements that could be satisfied using Networx customer-specified statement of work (SOW) services.

In the end, the CBA found Networx to be more flexible than previous GSA Government-Wide Acquisition Contracts (GWACs), because it allows agencies to develop SOWs for services that are not part of any pre-priced Contract Line Item Number (CLIN). An added benefit to agencies adopting the Networx contract is that OMB, having already conducted its extensive CBA of Networx, is waiving the requirement for agencies to conduct their own cost-benefit analyses.

That’s important because agencies that choose a non-Networx provider must complete both the CBA for that contract and an extensive comparison of why they chose that provider over Networx. The analysis must include requirements that are specifically priced in, or are within scope of, the Networx Universal or Enterprise contracts – including requirements that can be satisfied by completing a Networx SOW.

Beth Aluise is a freelance writer for 1105 Government Information Group’s Custom Media unit. This report was commissioned by the Custom Media Group, an independent editorial arm of 1105 Government Information Group. Specific topics are chosen in response to interest from the vendor community; however, sponsors are not guaranteed content contribution or review of content before publication. For more information about 1105 Government Information Group Custom Media, please email us at GIGCustomMedia@1105govinfo.com